Many investors find volatile – fast moving markets to be very unsettling, but low volatility – sideways markets can be equally frustrating because while risk could be lower, the potential for profit is probably reduced as well because option premiums are lower during these periods.
Here I’ll discuss a few strategies that I believe may be better suited for a low volatility – sideways moving market:
Out-of-the-money (OOTM) Covered Calls[/b]If you already own a stock and it is worth at least as much as you originally paid for it, covered calls can be a great way to generate income. If you sell out-of-the-money calls and the stock remains flat, declines or even increases a little, the options will likely expire worthless and you’ll keep the premium you received when you sold them, with no further obligation.
If the stock is above the strike price on the expiration date of the option, your stock will be called away at the strike price either prior to, or at expiration. If you sold...
